The Department for Education (DfE) has published the apprenticeship funding rules for 2026-2027, introducing some of the most significant changes to apprenticeship funding, employer contributions, compliance requirements and incentives in recent years.

Whether you’re an existing apprenticeship employer or considering recruiting apprentices in the future, understanding these changes is essential for effective workforce planning and budgeting.

In this article, we break down the key changes and explain what they mean for employers.

The Apprenticeship Levy becomes the Growth and Skills Levy

One of the biggest changes is the rebranding of the Apprenticeship Levy as the Growth and Skills Levy.

While the change in name reflects the government’s wider ambitions to create a more flexible skills system, employers also need to be aware of important financial changes that accompany it.

From 1 August 2026:

Levy funds will expire after 12 months, rather than the current 24 months.
New levy funds will no longer receive the 10% government top-up.
Employers will need to monitor levy balances much more closely to avoid funding being lost.

For levy-paying organisations, forecasting future training requirements will become increasingly important to ensure funds are fully utilised before expiry.

Changes to Employer Co-Investment

The funding rules introduce significant changes to employer contributions.

For apprenticeship starts from 1 August 2026:

Levy-Paying Employers

Where insufficient levy funds are available in the Apprenticeship Service account, the employer co-investment rate will increase to 25%.*

*We are expecting further updates regarding the 25% employer co-investment rate from September 2026 and will communicate this accordingly.

Non-Levy Employers

There is positive news for many non-levy employers.

Training and assessment costs will be fully funded by government for apprentices aged 16 to 24 at the start of their apprenticeship.

Previously, this fully funded provision only applied to younger apprentices, making apprenticeships more accessible and affordable for employers recruiting young talent.

For apprentices aged 25 and over at the start of their apprenticeship training, the employer contribution will remain at 5%.

New financial incentives for hiring young apprentices

Alongside funding reforms, employers will be able to access a stronger package of financial incentives than ever before.

£1,000 Young Apprentice Incentive

Available now for employers recruiting:

Apprentices aged 16 to 18
Apprentices under 25 with an Education, Health and Care Plan (EHCP)

£3,000 Youth Jobs Grant

Available now for employers who recruit:

Individuals aged 18 to 24
Claiming Universal Credit
Actively seeking work for six months or more

New £2,000 Employer Incentive

From October 2026, non-levy employers may be eligible for a new £2,000 incentive payment when:

Recruiting an apprentice under 25
The apprentice starts their apprenticeship within 90 days of joining the business
The apprentice is included within the employer’s PAYE scheme linked to their Apprenticeship Service account

Importantly, many of these incentives are not mutually exclusive, meaning employers could potentially benefit from multiple funding streams for the same apprentice.

Simplified contracting and pricing arrangements

Several administrative requirements are being streamlined.

The new rules remove the need for:

Breaking down apprenticeship costs into individual eligible cost categories
Separately agreeing training and end-point assessment costs
Manually agreeing individual prices for every apprentice

Instead, apprenticeship prices will be recorded through the Individualised Learner Record (ILR), with approvals managed via the Apprenticeship Service.

While the process will become simpler, employers must ensure they retain control of their Apprenticeship Service account.

The DfE has made it clear that employers must not allow third parties, including training providers, to operate or approve payments through their account.

New training plan requirements

The Training Plan becomes an even more important compliance document under the new funding rules.

Employers will now need to re-sign training plans when:

New learning content is added or removed
Planned end dates change
Training schedules are replanned due to learner delays

Additionally, at the end of the apprenticeship, employers, learners and providers will all be required to confirm that the agreed training has been fully delivered before progression to gateway.

Employers should expect increased engagement with training plans throughout the learner journey.

Maths and English rule changes

New flexibilities have been introduced for apprentices aged 19 and over.

Learners who opt out of maths and English delivery within their apprenticeship can now access these qualifications separately through Adult Skills Funding. There is also greater flexibility for learners who initially choose to study maths and English but later decide to withdraw. However, employers should note that any changes must be agreed and reflected within the Training Plan.

What should employers do now?

With major funding, compliance and incentive changes arriving from August 2026, employers should begin preparing now by:

Forecasting Growth and Skills Levy usage
Updating Apprenticeship Service account information
Checking PAYE records are accurate
Understanding available funding incentives
Reviewing apprenticeship budgets for 2026 and beyond

Organisations that plan ahead will be best placed to maximise available funding and avoid unnecessary costs.

Join our FREE webinar

To help employers understand exactly what these changes mean in practice, Tempdent is hosting a free webinar covering the 2026/2027 apprenticeship funding reforms and compliance requirements.

During the session, we’ll explain:

The new Growth and Skills Levy rules
Funding and co-investment changes
New employer incentives
Compliance requirements and common risks
Practical actions employers should take now

Register your place here

Need more information?

We’ve also produced a detailed guide covering all apprenticeship funding rule changes for 2026-2027.

View the guide

If you would like to discuss how these changes affect your organisation, contact the Tempdent team at hello@tempdent.co.uk.

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